12. Which of the following has the highest effective annual return (effective annual rate)? a. An account that pays 8% nominal interest with monthly compounding b. An account that pays 8% nominal interest with quarterly compounding An account that pays 8% nominal interest with annual compounding d. An account that pays 9% nominal interest with annual compounding e. An account that pays 9% nominal interest with quarterly compounding 13. Bronson is planning to save for his newborn daughter's college tuition, to be paid in 18 years. The amount he wishes to have by that time is $67,500. He plans to deposit $2,600 in a bank account every year for 18 years, starting next year. Suppose the account pays 2% interest on deposits, compounded annually. How much would he need to deposit right now, to make up the remaining amount necessary by the end of 18 years? a. $8,281.48 b. $8,662.91 $9,127.32 d. $9,532.28 e. $9,984.97 14. Suppose you just won the state lottery, and you can receive either $3,000,000 today or a 20-year annuity with payments of $250,000, with the first payment coming one year from today. What is the rate of return built into the annuity? a. 5.25% 6 5.35% C. 5.45% d. 5.55% e. 5.65%